The ITO, Ward 3(2), JAMNAGAR V. M/s New Chetna Lunch Home, JAMNAGAR

ITA 1302/RJT/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85417 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-11-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 29-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINESH KUMAR
• Assessee Lawyers: PM MAHARSHI
• Keywords: Income from undisclosed sources; Corroborative evidences; Retraction
• Section: 133A; 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL AT RAJKOT . . , , , BEFORE S/SHRI G.C. GUPTA, VICE - PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO . 1302 AND 1303 / RJT /20 1 0 [ASSTT.YEAR : 200 6 - 200 7 AND 2007 - 2008 ] ITO, WARD - 3(2) JAMNAGAR. / VS. M/S. NEW CHETNA LUNCH HOME OPP: LAL BUNGLOW JAMNAGAR. ( / APPELLANT) ( / RESPONDENT) / REVENUE BY : SHRI AVINESH KUMAR, DR / ASSESSEE BY : SHRI P.M. MAHARSHI / DATE OF HEARING : 24 TH NOVEMBER, 2014 / DATE OF PRONOUNCEMENT : 25/11/2014 / O R D E R PER ANIL CHATURVEDI , ACCOUNTANT MEMBER : TH ESE TWO APPEALS OF THE REVENUE ARE DIRECTED AGAINST THE ORDER S OF THE CIT(A) , JAMNAGAR DATED 20.9.2010 FOR THE ASSTT.YEARS 2006 - 07 AND 2007 - 08. BOTH THESE APPEALS ARE DISPOSED OF THROUGH THIS CONSOLIDATED ORDER FOR THE SAK E OF CONVENIENCE. 2. FIRST WE TAKE UP ITA NO.1302/RJT/2010 FOR A.Y.2006 - 07 FOR ADJUDICATION. THE GROUND S RAISED IN THIS APPEAL ARE AS UNDER: ITA NO. 1302 AND 1303 / RJT /20 1 0 - 2 - 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.8,24,730/ - MADE ON ACCOUNT OF GROSS PROFIT ESTIMATED @ 30% ON THE UNACCOUNTED SALES OF RS.27,49,100/ - 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE STATEMENT OF SHRI SURESH P. BHATT, ONE OF THE PARTNER , ACCEPTING THE SUPPRESSED RECEIPTS, WAS VOLUNTA RY, WHICH IS FURTHER CORROBORATED BY ISSUE OF CHEQUES OF RS.2,80,000/ - AS ADVANCE TAX AGAINST SUCH ACCEPTED UNDISCLOSED INCOME. 3. BRIEF FACTS OF THE CASE, AS CAN BE NOTED FROM THE RELEVANT ORDERS OF THE REVENUE AUTHORITIES ARE THAT THE ASSESSEE IS RUNNI NG A RESTAURANT. A SURVEY OPERATION UNDER SECTION 133A OF THE IT ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 8.8.2006 . STATEMENT OF ONE OF THE PARTNER, SHRI SURESH P.BHATT WAS RECORDED WHEREIN HE STATED TO HAVE EARNED ANNUAL TURNOVER OF RS.36,00,000/ - AND HIS GP THEREON WAS @30% OF THE TURNOVER. HE FURTHER STATED THAT FOR A.Y.2006 - 07, THE ASSESSEE HAS SHOWN TURNOVER OF RS.8,50,840/ - , AND THEREFORE HIS SUPPRESSED TURNOVER WAS RS.27,49,160/ - AND APPLYING GROSS PROFIT RATE OF 30% ON IT, H IS UNACCOUNTED INCOME FOR A.Y.2006 - 07 IS RS.8,29,750/ - . THEREAFTER, ON 21.8.2006, SHRI ASHOK P. BHATT, PARTNER OF THE FIRM HAD FILED AN AFFIDAVIT WITH THE AO STATING THAT SHRI SURESH BHATT MADE THE STATEMENT UNDER DURESS AND PRESSURE BY SURVEY PARTY, AND THEREFORE, THE SAME IS RETRACTED AND THERE IS NO UNACCOUNTED SALES MADE BY THE FIRM AND CONSEQUENTLY NO UNACCOUNTED INCOME. TO THE SHOW CAUSE NOTICE ISSUED BY THE AO, THE ASSESSEE OBJECTED TO THE ADDITION STATING THAT NO ADDITION CAN BE MADE ON THE BASIS OF THE STATEMENT RECORDED IN SURVEY PROCEEDINGS WITHOUT FINDING ANY MATERIAL CORROBORATING THE DISCLOSURE AND STATEMENT AND THAT THE ORIGINAL STATEMENT WAS RECORDED UNDER PRESSURE. THE AO DID NOT BUY THESE CONTENTIONS OF THE ASSESSEE AND MADE ADDITION OF RS.8,24,730/ - TO THE TOTAL INCOME OF THE ASSESSEE BASED ON THE STATEMENT OF SHRI SURESH P. BHATT. ITA NO. 1302 AND 1303 / RJT /20 1 0 - 3 - 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A), WHO DELETED THE ADDITION BY FOLLOWING OBSERVATIONS: 5. I HAVE CAREFU LLY CONSIDERED THE SUBMISSION OF THE APPELLANT AS WELL AS THE REASON GIVEN BY THE AO IN ASSESSMENT ORDERS. AO HAS MADE ADDITION SOLELY ON THE BASIS OF THE STATEMENT OF THE PARTNER OF THE FIRM. WITHIN SPAN OF TWENTY DAYS THE STATEMENT IS RET RA CTED AND ON EX AMINATION OF ANOTHER PARTNER, HE ALSO DENIED THAT THERE ARE ANY UNACCOUNTED SALES MADE BY THE FIRM. IN THE ASSESSMENT ORDER NO REFERENCE IS MADE TO ANY OF THE IMPOUNDED MATERIAL OR ANY OTHER RECORD WHICH SHOWS UNACCOUNTED SALES MADE BY THE APPELLANT. FURTH ER G. P. SHOWN BY THE APPELLANT ON THE RECORDED SALES SUPPORTED BY BOOKS IS APPROXIMATELY 28.54 % WHICH IS ALSO NOT DISPUTED BY AO. MAIN REASON GIVEN BY AO FOR MAKING THE ADDITION IS THAT AS ONE OF THE PARTNER SHRI SURESHBHAI BHATT WAS PRESENT: AT THE TIME OF SURVEY WHO HAD AGREED FOR SUPPRESSION OF SALE BEFORE THE SURVEY PARTY IN THE STATEMENT RECORDED BY HIM AND THEREAFTER THE FIRM HAD FILED AN AFFIDAVIT ON 22.08.2006 RETRACTING THE DISCLOSURE, WHICH WAS AN AFTERTHOUGHT ACTION TO ESCAPE FROM THE TAX LIABI LITY ON THE INCOME FROM UNACCOUNTED SALE. HE WAS FURTHER OF THE OPINION THAT AS ASSESSEE FIRM HAS DEPOSITED SELF ASSESSMENT TAX OF RS. 2,80,000/ - ON 31.08.2006 VIDE CHALLAN NO BSR: 0001816 CIN: 23 ON AGREED BASIS SHOWS THAT THE APPELLANT AGREED FOR THE UNA CCOUNTED SALE BEFORE THE SURVEY PARTY AND PAID THE TAX DUE THEREON. THIS FACT LEADS TO SAY THAT HE HAD NO OBJECTION FOR THE DECISION TAKEN DURING THE COURSE OF SURVEY. THEREFORE REJECTING THE SUBMISSION OF THE' APPELLANT AO HAS MADE THE ADDITION. THIS SHOW S LACK OF ANY EVIDENCE AGAINST THE APPELLANT EXCEPT THE STATEMENT OF SHRI SURESH P BHATT WHICH WAS LATER ON RETRACTED AND NO INCOME WAS OFFERED IN THE RETURN OF INCOME BASED ON THAT RETRACTION. RELIANCE PLACED BY THE APPELLANT ON DECISION OF HONOURABLE GUJ ARAT HIGH COURT ALSO CONFIRMS THE ARGUMENT PLACED THAT NO ADDITION CAN BE MADE IN THE HANDS OF ASSESSEE MERELY ON THE BASIS OF THE STATEMENT WHICH IS RETRACTED LATER ON. IN THE CASE OF CIT V BRIJESH A AGHERA ADDITION MADE ON THE BASIS OF STATEMENT RECORDED IN SURVEY WERE DELETED. IN THAT CASE IN THE ASSESSMENT FRAMED THE AO MADE A NUMBER OF ADDITIONS ON THE BASIS OF STATEMENT OF THE ASSESSEE RECORDED U/S 131 DURING THE COURSE OF SURVEY PROCEEDINGS. THE ASSESSEE SUCCEEDED ON EACH OF THE GROUNDS BEFORE CIT(A) . REVENUE'S APPEAL WAS DISMISSED BY THE TRIBUNAL. BOTH CIT(A) AND TRIBUNAL HAVE FOUND, AS A MATTER OF FACT, THAT FACTUALLY THE STATEMENT STATED TO HAVE BEEN MADE BY THE ITA NO. 1302 AND 1303 / RJT /20 1 0 - 4 - ASSESSEE WAS NOT SUPPORTED BY EVIDENCE AND THE FACTS AND EVIDENCE ON RECORD POINTED OUT A CONTRARY POSITION. HONOURABLE GUJARAT HIGH COURT CONFIRMED THE DELETING OF ADDITIONS. IN THE PRESENT CASE ALSO THERE I S NO EVIDENCE SUPPORTING TURNOVER DISCLOSED BY THE PARTNER OF APPELLANT IN THE SAID STATEMENT AND, THE BOOKS OF ACCOUNTS ARE ACCEPTED B Y THE AO AND HAS NOT STATED THAT ON HOW MANY NUMBER OF DAYS NUMBER OF DISHES RECORDED BY APPELLANT ARE SUPPRESSED. MERELY CLEARING OF CHEQUE TAKEN DURING THE COURSE OF SURVEY OF TAX DOES NOT PROVE THAT STATEMENT RECORDED BY APPELLANT WAS VOLUNTARY WHEN APP ELLANT HAD REQUESTED THE AO ON 21 - 08 - 06, ITSELF, NOT TO DEPOSIT THE CHEQUE TAKEN DURING THE COURSE OF SURVEY. HENCE REASONING GIVEN BY AO OF PAYMENT OF TAX OF RS 2,80,009/ - FOR MAKING ADDITION IS MISPLACED. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF HONOURABLE GUJARAT HIGH COURT AND IN ABSENCE OF ANY CONTRARY EVIDENCE AVAILABLE DURING THE SURVEY, TURNOVER OF THE APPELLANT CANNOT BE WORKED OUT ON THE BASIS OF MERELY THE STATEMENT OF THE PARTNER, WHICH WAS RETRACTED, AND THEREFORE, ADDITION OF RS.8,24,7 30/ - IS DELETED. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. THE LEARNED DR DR EW OUR ATTENTION TO THE RELEVANT PARAS OF THE ASSESSMENT ORDER. HE FURTHER SUBMITTED THAT PARTNER, SHRI SURESHBHAI BHATT HAS VOLUNTARY GI VEN THE STATEMENT ON OATH DURING THE SURVEY DISCLOSING SUPPRESSION OF SALES AND RETRACTION STATEMENT WAS AFTER - THOUGHT TO ESCAPE TAX LIABILITY. HE FURTHER SUBMITTED THAT ASSESSEE FIRM ITSELF HAS DEPOSITED THE ASSESSMENT TAX OF RS.2,80,000/ - ON 31.8.2006 O N AGREED BASIS, AND THEREFORE, IT IS CLEAR ADMISSION ON THE PART OF THE ASSESSEE OF SUPPRESSED SALES. HE THUS RELIED ON THE ORDER OF THE AO. 7. THE LEARNED COUNSEL FOR THE ASSESSE E , ON THE OTHER HAND, RELIED ON THE ORDER OF THE CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFORE BOTH THE AUTHORITIES . HE FURTHER STATED THAT THE SAID SHRI SURESH P. BHATT, WHO G AVE THE STATEMENT , WAS QUITE UNWELL DURING THE SURVEY , AS HE HAD UNDERGONE ITA NO. 1302 AND 1303 / RJT /20 1 0 - 5 - BYE - PASS SUR GERY . IT IS SUBMITTED THAT SURVEY PARTY PRESSURIZED SHRI SURESH P. BHATT TO MAKE STATEMENT TO DECLARE MORE AMOUNT. IT IS SUBMITTED THAT THE ASSESSEE IS MAINTAIN ING REGULAR BOOKS OF ACCOUNTS AND ALL THE SALES ARE RECORDED, AND IN FACT THERE IS NO SUPPRESSION BY THE ASSESSEE AS ALLEGED BY THE DEPARTMENT. IT IS F URTHER SUBMITTED THAT THE STATEMENT RECORDED DURING THE SURVEY ACTION DOES NOT HAVE THE EVIDENTIARY VALUE WITHOUT SUPPORT OF CORROBORATIVE EVIDENCES. IT IS FURTHER SUBMITTED THAT THE FIGURE OF SALES SHOWN BY THE ASSESSEE IS BASED ON THE ESTIMATION AND THA T NO INCRIMINATING MATERIAL DOCUMENTS FOUND BY THE DEPARTMENT TO SUGGEST THAT THERE WERE SALES WHICH WERE NOT SHOWN IN THE BOOKS, AND THEREFORE, THERE WAS NO REASON FOR MAKING ANY ADDITION. IT IS SUBMITTED THAT THE CIT(A) HAS CONSIDERED ALL THE MATERIAL P LACED ON RECORD AND THE EXPLANATION OF THE ASSESSEE, AND RIGHTLY DELETED THE IMPUGNED ADDITION. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND ALSO THE ORDERS OF THE REVENUE AUTHORITIES. WE FIND THAT THE STATEMEN T MADE DURING THE SURVEY BY SHRI SURESH P. BHATT, ONE OF THE PARTNERS OF THE FIRM, WAS RETRACTED SUBSEQUENTLY. THE PHYSICAL AND MENTAL CONDITION OF THE SAID SURESH P. BHATT DURING THE SURVEY ACTION WHILE RECORDING THE STATEMENT, HAS NOT BEEN DENIED BY TH E DEPARTMENT. WE ALSO FIND THAT TO SUPPORT THE ALLEGED SUPPRESSION OF SALES, THE DEPARTMENT COULD NOT UNEARTH ANY INCRIMINATING DOCUMENTS DURING THE SURVEY. THE ADDITION HAS BEEN MADE MERELY ON THE BASIS OF THE STATEMENT OF SHRI SURESH P. BHATT AND BASED ON SOME ESTIMATION. IT IS SETTLED PROPOSITION OF LAW THAT NO ADDITION CAN BE MADE CONSEQUENT TO THE SURVEY ACTION, UNLESS THERE IS SUFFICIENT AND CLINCHING MATERIAL TO SHOW THAT THE INCOME HAS BEEN SUPPRESSED. WE FIND THAT THE CIT(A) HAS RECORDED THAT GP SHOWN BY THE APPELLANT ON THE RECORDED SALES SUPPORTED BY BOOKS IS APPROXIMATELY 28.54% WHICH IS ALSO NOT DISPUTED BY THE AO. HE FURTHER ITA NO. 1302 AND 1303 / RJT /20 1 0 - 6 - OBSERVED THAT MAIN REASON GIVEN BY THE AO FOR MAKING THE ADDITION IS THAT AS ONE OF THE PARTNER SHRI SUREHSBHAI BHA TT WAS PRESENT AT THE TIME OF SURVEY, WHO HAD AGREED FOR SUPPRESSION OF SALES BEFORE THE SURVEY PARTY IN THE STATEMENT RECORDED BY HIM, AND THEREAFTER THE FIRM HAD FILED AN AFFIDAVIT ON 22.8.2006 RETRACTING THE DISCLOSURE, WHICH WAS AN AFTERTHOUGH T ACTIONS TO ESCAPE FROM THE TAX LIABILITY, AND THIS SHOWS LACK OF ANY EVIDENCE AGAINST THE APPELLANT EXCEPT THE STATEMENT. NOTHING HAS BEEN BROUGHT BEFORE US BY THE DEPARTMENT TO CONCLUSIVELY PROVE THAT THE ASSESSEE IS INDULGING IN UNACCOUNTED SALES OR INCOME BY THE ASSESSEE. IN THESE FACTS OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) DELETING THE IMPUGNED ADDITION, WHICH IS UPH E LD, AND THE GROUND S OF THE REVENUE ARE DISMISSED. ITA NO.1303/RJT/2010 A.Y.2007 - 2008 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.6,07,645/ - MADE ON ACCOUNT OF GROSS PROFIT ESTIMATED @ 30% ON THE UNACCOUNTED SALES OF RS.20,25,477/ - 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE STATEMENT OF SHRI SURESH P. BHATT, ONE OF THE PARTNER, ACCEPTING THE SUPPRESSED RECEIPTS, WAS VOLUNTARY, WHICH IS FURTHER CORROBORATED BY ISSUE OF CHEQUES OF RS.2,80,000/ - AS ADVANCE TAX AGAINST SUCH ACCEPTED UNDISCLOSED INCOME. 9 . BOTH THE PARTIES B EFORE US SUBMITTED THAT GROUNDS IN BOTH THE YEARS ARE IDENTICAL AND FACTS ARE SIMILAR EXCEPT QUANTUM, AND THEREFORE, GROUNDS IN THE PRESENT CASE MAY ALSO BE DISPOSED OF ON SIMILAR LINE. WE FIND THAT GROUNDS FOR THE ASSTT.YEARS 2006 - 07 AND 2007 - 08 ARE SIMI LAR EXCEPT QUANTUM ADDITION, AND THEREFORE, FOR THE REASONS RECORDED WHILE DISPOSING ITA NO. 1302 AND 1303 / RJT /20 1 0 - 7 - OF THE APPEAL OF THE REVENUE FOR A.Y.2006 - 07, WHEREIN WE HAVE DISMISSED THE APPEAL OF THE REVENUE, WE DISMISS THIS APPEAL OF THE REVENUE ALSO . 10 . IN THE RESULT, BOTH TH E APPEAL S OF THE REVENUE ARE DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/ - SD/ - ( . . /G.C. GUPTA) /VICE - PRESIDENT ( / ANIL CHATURVEDI) /ACCOUNTANT MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER AR, ITAT, RAJKOT